In this video we’re going to investigate the risks and rewards of entrepreneurship
and running your own enterprise.
Along with a look into Elon Musk and the rewards he has reaped from starting Tesla.
Enterprise & Entrepreneurship When running your own enterprise or being
an entrepreneur there is always some level of risk involved.
This can be deciding to become a self employed electrician or running your own multi national
corporation.
There is always the potential for things to go wrong and for the business venture to fail.
However the fact that they have taken that risk to set up a business means that they
fundamentally believe that the rewards outweigh the risks.
If you are an entrepreneur looking to start a business and are toying with the idea of
becoming self employed then this video is should help you weigh up those options as
I will talk through.
The common risks, such as Financial loss
Lack of security Business failure
But also the rewards you can look forward to if the business succeeds, such as:
Profit (financial reward) Success
Independence First lets have a look at the risks.
Successful entrepreneurs are good at weighing up risks and rewards and it is not about blindly
taking every opportunity, but it is about taking calculated risks where the reward seems
to outweigh the risk involved.
Some of the risks involved with setting up and running an enterprise are:
financial loss – This could be when initially setting up the business and it failing meaning
that the entrepreneur would lose their investment or it could relate to a financial loss based
on a decision made such as ordering a large amount of stock that then does not sell.
If these decisions are made and they are not successful then it could mean that loans cannot
be repaid and not only the entrepreneur themselves will lose money but any investors in the business
too.
Another risk is the lack of security that comes with running your own business.
When employed by a company that employee usually benefits from a set wage, set shift patterns,
holiday and sick pay.
However when this employee decides to pursue their own venture then these things can be
gone overnight.
Business owners may need to work irregular hours to the demands of the start up, take
a pay decrease and are now reliant financially on the success of the business this is all
a lack of security and stability in their lives and is definitely a risk if the owner
needs security in their lives.
The last but probably the most significant risk and most deliberated when thinking of
setting up your own business is the chance of the business failing.
According to data from the Bureau of Labour Statistics, approximately 20 percent of small
businesses fail within the first year.
By the end of the second year, 30 percent of businesses will have failed.
By the end of the fifth year, about half will have failed.
This all means that there is a 50/50 chance that by the end of 5 years the business you
are leaving employment for may cease to exist.
Most issues come down to revenue and not having a healthy cash flow to ensure there is enough
money to cover the operating costs of the business.
Knowing this is a clear risk and is one part of the process when making the decision to
run an enterprise.
It is often about minimising these risks through proper research and good cash management to
eventually reap the rewards of running and operating your own enterprise.
If the odds of business failure are so high then why would anyone start their own business.
Well that is because if the business is a successes then the rewards are often not achievable
whilst working for someone else.
The first being profit Making money is a very good reason and reward
for any entrepreneur.
By starting your own business you hoping to make more money than working a 9 to 5 job.
Making a profit is clearly a draw for most entrepreneurs as the potential in most industries
is limitless.
Take amazon for example.
When they first started I am sure Jeff Bezos never dreamed of being a multi billionaire
from selling books online yet now he is and this is something he could not have done working
for a salary.
Despite this extreme though it can be massively profitable on a smaller scale in terms of
an electrician working on site for say 35k a year but once running their own business
they may be able to make 70k again a huge increase in earning potential but again more
risky like the examples we looked at previously.
Therefore they are rewarded for taking that risk.
Business success Seeing something you are passionate about
going from an idea to a fully-fledged business can be massively rewarding.
Similarly having positive feedback from customers, growing the businesses reputation and revenues
and becoming a trusted brand are all rewarding aspects of owning an enterprise.
Finally we come to Independence In my opinion this would be the biggest reason
on my list for starting an enterprise and that is basically the freedom that comes with
running your own business.
Not only the freedom of not having a boss but the freedom of following a passion and
working on something that truly interests you.
You can control your own working hours, make your own decisions and pursue avenues that
truly fulfil you.
Again these can be massively rewarding aspects for any entrepreneur and are clear rewards
for the risks they take setting up their own business.
Lets put all this into context then.
Tesla are a huge business that at the time of recording this are valued at over 600 billion
making Elon musk worth 170 billion.
However this has not always been the case as Tesla have come close to folding at various
points in their history which will have put Elon under immense pressure however due to
his perseverance and risk taking he has managed to become one of the wealthiest people alive.
Going from working in a lumber mill in Canada to selling his first company for 300 million
dollars.
Non of which would have been possible if he had not taken the risk to achieve the huge
rewards.
Company worth over 600 billion Personal worth of 170 billion
Selling Paypal for 1.5 billion to ebay Starting space x, Tesla, Neuralink and the
boring company Who knows, if he keeps going we may have humans
on mars and microchips in our brains that can help us learn new skills.
Elon musk is an extreme example of what is possible but whether it is making billions
or just making enough to live on your own terms, enterprise and entrepreneurship does
give people the opportunity to make their life what they want it to be.
Thanks for watching the video we really do appreciate you watching to the end and if
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